“Looking at the quarterly results on a more granular basis, the improved conditions over the March quarter can largely be attributed to the performance of Australia’s largest housing market, Sydney, where values rose 1.1 per cent over the quarter. Values were down across many of the other capital cities over the quarter with the most significant drop recorded in Adelaide where dwelling values were down 1.5 per cent,” Mr Lawless said.

According to the managing director of Rismark International, Ben Skilbeck, “While the housing market remains soft, the zero per cent change over the first quarter of 2012 demonstrates that it is consolidating its position following the decline seen in calendar year 2011. This month it was the resource rich states which delivered the strongest gains with Perth, Darwin and Brisbane up 1.4 per cent, 1.1 per cent and 0.8 per cent respectively”.

Over the twelve months ending March 31, capital city home values are down 4.4 per cent with the largest falls being recorded in Hobart (-7.3 per cent), Brisbane (-6.1 per cent), Adelaide (-5.7 per cent) and Melbourne (-5.4 per cent). Despite the fall in Melbourne home values they are still up 45.5 per cent since the start of 2007. At the other end of the spectrum, Canberra continues to show the most resilience with values down just -0.3 per cent over the year.

According to Mr Skilbeck there are a number of factors pointing towards an improvement in housing market conditions over recent months.

“The ratio of national house prices to household disposable incomes is currently below the decade average. Additionally, according to the ABS housing finance data, both the value and number of loan approvals for the purchase of established dwelling are at levels not seen since November 2009. First home buyers as a proportion of all home loans approved are back to levels not seen for 2 years,” Mr Skilbeck said.

Yields are also showing modest improvements. According to Mr Skilbeck, “rental yields for houses across the combined capital cities have moved from just 3.6 per cent eighteen months ago to 4.1 per cent and gross yields on unit dwellings have improved from a recent low of 4.4 per cent to 4.8 per cent. The most significant rental yield improvements have been recorded in Darwin, Perth and Brisbane where yields have increased by 22 per cent, 21 per cent and 18 per cent respectively from their recent lows.”

Other market metrics are also showing some improvement. “The number of properties available for sale is continuing to moderate from the historic highs which peaked late last year and auction clearance rates have been holding above 50 per cent for most of 2012,” Mr Lawless said.

“Additionally, we have recently seen the Reserve Bank reporting that the rate of mortgage arrears has fallen from a peak of 0.7 per cent to 0.6 per cent, a default rate which is comparably low by international standards. The latest Financial Stability Review from the RBA also highlighted that most mortgage holders are paying down more of their mortgage debt than they are contractually obliged to, a sure sign that Australian’s are coping with their mortgage debt,” Mr Lawless said.

Late last week the Australian Bureau of Statistics (ABS) released dwelling commencements data for the December 2011 quarter. The data showed that the insufficient supply of new housing continued with the number of new home starts falling by -13.4% to 33,653 commencements over the quarter. This result was the lowest number of dwelling starts over any quarter since June 2009. Over the 2011 calendar year there were 148,108 dwelling commencements, well down on the 169,884 commencements in 2010. The more timely building approvals data which is a good lead indicator to dwelling commencements has shown no significant improvement in recent months suggesting that commencement volumes are likely to continue to languish.

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.
Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.
Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.
Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”
In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.
While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.
Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generate actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

Labour price index data released by the Australian Bureau of Statistics (ABS) this week shows that the hourly rate of pay increased by 1.0% over the December 2011 quarter. While private sector wages were up 1.0%, public sector wages rose by just 0.8%. Over the 2011 calendar year private sector wages increased by 3.8% compared to a 3.2% increase in public sector wages. The annual increase in wages is right in line with the long-term average.

Westpac and the Melbourne Institute released their Leading Index for December 2011 this week. The Index indicates the likely pace of economic activity three to nine months into the future. The Index was up 2.3% in December 2011 which is below the long-term average of 3.0% and suggests that economic activity will slow further through the first half of 2012.

Westpac and the Melbourne Institute released the results of the January consumer confidence survey this week. The Consumer Sentiment Index rose by 2.4% over the month to 97.1 points, the result shows that respondents remain more pessimistic than optimistic and it would appear that with the Index below 100 points for consecutive months that interest rate cuts alone have not been enough to improve sentiment. Respondents to the survey are most concerned about the state of their family finances over the last 12 months and the economic conditions over the next 12 months and five years.

The TD Securities-Melbourne Institute Monthly Inflation Gauge for December 2011 was released this week, preceding the official quarterly results which will be released by the ABS next week. The result showed a 0.5% increase in inflation in December following a -0.1% fall in November and a 0.1% increase in October. According to the Index, inflation has been fairly benign over the quarter, up just 0.4% and the trimmed mean has risen by just 0.2%. Based on these results it appears that the official rate of inflation is likely to be fairly low over the December 2011 quarter once released next week.

Please note that the September 2011 Quarter Equity Report (RRP $2,500) is exclusive to our RP Data subscribers only and cannot be republished without the consent and permission from RP Data.

The highlights of the report are:

Strong growth in home values over the recent growth cycle is why most regions have seen significant levels of equity accumulation.
Over the five years to September 2011, capital city home values increased by around 28 per cent.
Australian housing markets recorded value declines recently with capital city home values down 3.3 per cent from their October 2010 peak to September 2011.
4.9 per cent of all Australian homes are currently valued at less than purchase price; the negative equity figure has risen from 3.7 per cent at the end of the last quarter.
Approximately 43 per cent of homes are worth more than twice the original purchase price; down from close to 45 per cent last quarter.
Properties in Victoria, and more particularly Melbourne, tend to be owned longer.
Properties in Queensland and South Australia have higher turnover rates; therefore equity levels in these states tend to be lower lower than in other states.
Far North Queensland & the Gold and Sunshine Coasts have the highest instances of negative equity at 20.2%, 14.0% and 13.5% respectively.
Western Australia’s Lower Great Southern and South West and South Eastern Western Australia are showing high levels of negative equity.
The highest proportion of homes that are now worth at least double their initial purchase price is typically either regional and non-coastal, or capital city markets.
Capital cities have enjoyed long-term value appreciation and have proven to be less susceptible to ongoing value falls than certain non-capital city markets.

Click HERE to read full report!

RP Data-Rismark Home Value Index Release

In seasonally-adjusted terms, Australia’s capital city home values rose by 0.1 per cent in November, which was the first increase since December 2010. Regional house values recorded a 0.3 per cent (s.a.) rise in November, which was also the biggest increase since December 2010.

Based on around 312,000 sales over the first 11 months of 2011, the market-leading RP Data-Rismark Home Value Index recorded increases in home values across both capital city and regional markets in the month of November following the RBA’s decision to cut interest rates by 0.25 percentage points.

In seasonally-adjusted terms, capital city home values ground-out a modest 0.1 per cent gain (-0.2 per cent raw) in November. House values across Australia’s non-capital city or ‘regional’ markets, which account for about 40 per cent of all homes by number, also rose by 0.3 per cent in seasonally adjusted terms (-0.1 per cent raw).

Rismark’s director, Christopher Joye, commented, “For Australia’s capital city and regional markets, this was the single best monthly result since December 2010, and augurs well for housing activity during the first quarter of 2012, which we project will rebound solidly. The best proxy for housing demand—the number of new home loans approved for purchasing established properties—has risen robustly every month since its nadir in March.”

The November result has helped improve the Australian housing market’s year-to-date performance. Whereas in October RP Data-Rismark reported that capital city dwelling values had declined by four per cent in the first 10 months of 2011, the November year-to-date index change is now just -3.7 per cent (seasonally-adjusted). In actual raw terms, Australian capital city dwelling values have only declined by -2.8 per cent in the first 11 months of 2011.

Regional markets have performed even better. Over the year to November 2011, regional house values are only off by -2.6 per cent in raw terms (or -2.8 per cent seasonally-adjusted). Including gross rents, the total return realised by investors in capital city property remained positive in 2011 at +1.2 per cent.

According to RP Data’s Senior Research Analyst, Cameron Kusher, there remains significant diversity across capital city housing markets.

“Although home values have fallen across each capital city, Sydney and Canberra have been the most resilient with dwelling values off just -0.5 per cent (s.a.) and -1.6 per cent (s.a.) over the year, respectively” Mr Kusher said.

He continued, “On the other hand, Brisbane and Melbourne home values have recorded total declines of -7.0 per cent (s.a.) and -5.6 per cent (s.a.), respectively.”

“In the month of November, Sydney, Melbourne, Perth and Canberra produced flat-to-positive capital gains following the RBA rate cut. In contrast, home values in Adelaide, Brisbane and Darwin softened further,” Mr Kusher said.

Rismark director, Christopher Joye added, “The November result is consistent with our forecasts that Australia’s housing market will respond much more quickly to the RBA’s November and December cuts than many analysts expect. Over 90 per cent of all Australian home loans are fully variable rate, and lenders have passed on most of the 0.50 percentage points worth of RBA rate cuts during the final two months of the year. Borrowers can now get fixed-rate loans for around 5.9 per cent and discounted variable rate loans as low as 6.14 per cent. As Australia’s most interest rate sensitive sector, the housing market will be one of the biggest beneficiaries of the RBA’s munificence alongside consumer spending. We expect to see house prices rising again in 2012.”

Can real estate agents really still justify the commissions they charge?
Are inflated sale commissions simply paying for expensive printed media ads to generate listing enquiry for agents?
Do newspapers and property magazines really still sell enough real estate to justify the massive publishing cost? 

The information below is readily available to the general public for FREE so feel free to check it out at http://www.google.com/trends 

Looking at the chart above it is easy to see what form of media will give your property the most exposure and in turn bang for buck! We have also run a comparison below of some of the property websites available for the promotion of your property. I’m confident that after viewing this information you will form a firm opinion about where your property should be promoted. Your property will be subject to unrivalled exposure through www.realestate.com.au 

In Summary
By using the latest technology available, your real estate agent should be able to keep your commissions to a more reasonable level than the industry average and still expose your property where it will almost certainly be seen by an overwhelming majority of the market.

Information collated by CPC Property Sales

The Australian Bureau of Statistics (ABS) released building approvals data this week for September. Following a 10.7% jump in the month of August, approvals fell by -13.6% in September. After falling -0.5% in the previous month, private sector house approvals rose by 1.1% in September. Conversely, following a 32.8% increase last month, the more volatile unit approvals fell by -30.7%. Overall, total building approvals in September 2011 were -12.0% lower than 12 months ago highlighting the ongoing weakness in the new home market.

The RBA released lending credit aggregates last week and it showed that growth in housing credit remained fairly benign. Total housing credit increased by 5.7% over the 12 months to September 2011 with owner occupier housing credit rising by 6.1% and investor housing credit up just 4.6%. Although both measures have increased at a rate above annual inflation (3.5%), it is clear that growth in housing credit is fairly limited at this time.

The National Accounts were also released this week by the Australian Bureau of Statistics (ABS). Gross Domestic Product (GDP) increased by 1.2% during the June 2011 quarter after falling by -0.9% over the March 2011 quarter. On an annual basis GDP increased by 1.4% over the 12 months to June 2011. The data also revealed that the net household savings ratio over the quarter remained high at 10.5% however, it fell from 11.7% in the March 2011 quarter. Another highlight was the disposable incomes data which reveals that income growth is slowing. After disposable incomes grew by 5.4% over the 12 months to March 2011, the most recent data shows a growth rate now tracking below inflation, up by just 2.4% over the year to June 2011.

Housing finance data was also released by the ABS this week and it showed that the number of owner occupier finance commitments increased by 1.0% over the month of July 2011 and increased by 5.0% over the year. The total value of owner occupier housing finance commitments increased by 1.4% over the month and by 5.9% over the year and the total value of investment finance commitments increased by 1.9% over the month however, investor loans were down -9.0% over the year.

The number of new properties advertised for sale over the 4 weeks to 4 September 2011 was 3.2% higher than at the same time last year and across the combined capital cities new listings were -0.5% lower. The total number of properties advertised for sale nationally over the past 4 weeks was 3.9% higher than it was over the 4 weeks to 28 August. Across the combined capital cities, total listings increased by 4.1% over the week. Total listings are now 34.6% higher than they were at the same time last year nationally and 33.3% higher across the combined capital cities.